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Putting a Student Face on the State Authorization Regulation

By Russell Poulin, Jim Fong

08/24/11

An increasing number of institutions will soon make the tough decision to no longer serve students residing in some states. Many have already done so. They take this action because of state regulations that place restrictions over which institutions can serve students taking courses via distance and correspondence education. While these rules seek to protect consumers, a recent survey by WCET and the University Professional & Continuing Education Association suggests that many thousands of students will be “protected” out of taking courses.

A Brief Background on State Authorization

In October, the U.S. Department of Education asked institutions to follow state laws when serving students via distance or correspondence studies in other states. While this sounds simple, it is terribly complex. Each state has its own laws and regulations pertaining to out-of-state institutions. Some states have no regulation. A few states have regulations that are almost as costly and complex to deal with as another accreditation review. Whether your institution has to apply for approval depends on what your institution is doing in a particular state concerning a long list of factors.

Given this regulatory labyrinth, institutional personnel are confused, frustrated, and often lost.

You might be asking yourself, “Didn’t I hear that the distance education portion of the DOE’s state authorization regulations had been struck down?” While a federal court ‘vacated’ the regulation, the Department is considering whether to appeal the ruling or to reissue the regulation in a way that overcomes the court’s objection. In any case, neither the ruling by the federal court nor the pending federal legislation has an impact on the state regulations, which still expect you to comply with their laws.

The UPCEA/WCET study showed that of the 215 institutions surveyed, while most have taken the first steps (97 percent), many still have not applied (69 percent) to any state. Many institutions are confused and frustrated by state-to-state regulatory inconsistencies. Nearly one in five are in denial, believing that the legislation will finally be repealed. Another 29 percent stated they simply have no staff available to file the needed applications.

What if certain state regulations either prevent or make it too difficult for out-of-state institutions to operate distance learning programs in their state?

The end result could have a huge impact not only on the institution, but also on the student. This is especially true for students at smaller institutions--colleges with 5,000 or fewer full-time enrollments. Those colleges were more likely to say they have no staff available to apply to the states or that they believe the pending legislation will be repealed.

Overall, 59 percent of institutions surveyed said they will not be able to serve students from specific states. The states most likely to be impacted as a result of fewer potential providers of distance education are Massachusetts, Minnesota, Arkansas, Kentucky, Wisconsin, Oregon, and Alabama.

There were 111 of the UPCEA/WCET survey’s responding institutions that could estimate how many students they would no longer be able to serve, based on their institution’s inability to comply with state regulations. The combined estimates of just these 111 institutions totaled more than 19,000 students that would no longer be served.

We wondered how these findings might project across all institutions. Based on our findings, we estimated that about three-quarters of the roughly 6,000 institutions that the Department of Education recognizes as accredited offer graduate or undergraduate online programs to students in different states. Our estimates indicated that an average of 232 students/institution would not be served across 4,488 institutions. Our calculations resulted in a very rough but striking estimate of 1,041,216 students that would no longer be served at a distance by their current colleges.

While a percentage of these students will find alternatives, some will not, and certainly all will suffer from a loss of choices. Those who are still served may experience increased costs, as the colleges must cover the compliance expenses and the loss of revenue from a reduced pool of students.

The Impact on Students--Examples

Even if we cut the estimate of a million students in half or even to a tenth of what we estimated, it still represents a sizeable number of students experiencing fewer choices, higher costs, and the lack of access to specialized programs. The following examples represent instances where students will be disadvantaged and are based on conversations with real students or campus personnel.

Armed services personnel, military spouses, corporate professionals, or other transient students that are midway through a program may suddenly find themselves transferred to a state for which their college is not approved. The institution may seek an exception from the state and the state might grant one, but neither is guaranteed and the student might be unable to complete the program.

Many colleges report that they did not market to these students. The students found them. We can guess at the many reasons why a student from the east coast would chose an online program from the other side of the country. It might be a family connection, an affinity with the academic program, the cost of the program, pure serendipity, or some other reason that enticed the student to enroll. Whatever the reason, options will be more limited.

Typically, private for-profit institutions have both the motivation and finances to seek approval in every state. Smaller colleges, smaller academic programs, and community colleges are less likely to have the resources to apply in all states. Students will have fewer options to attend less expensive colleges, pursue less costly degrees, and assume fewer student loans.

We are sure that there are many other compelling examples. These few give you a glimpse of how students could unwittingly be caught in a regulatory trap that was intended to protect them.

Moving Forward

Unfortunately, there are no easy answers. The main players have different motivations:

· Students want access to the broadest number of collegiate options, while avoiding being swindled.

· Regulators wish to protect students, but have little incentive or capability to change outmoded processes. (Even so, a handful have re-examined their rules and have tried to make accommodations where they can or have joined efforts to find a solution.)

· Institutions want to continue serving the same students and expand to new territories. Many institutions are applying to states, but don't have the resources to comply in all states that require authorization. Others are motivated to ignore the regulations because they assume they will not get caught--we do not recommend that course of action.

Currently there are groups trying to forge reciprocal agreements for states, however such agreements take time. After the agreement is created, it needs to be sold to the states, and some states will need to enact legislation to accept the agreement.

Meanwhile, we will get used to colleges posting lists of states where they can’t serve students. Frustrated students will double-check their calendars to make sure that we are actually in the 21st Century.